Acasta Enterprises Reports First Quarter Results

BUSINESSWIRE PRESS RELEASE

Acasta Enterprises Reports First Quarter Results

May. 16, 2018

TORONTO--(BUSINESS WIRE)--May 15, 2018--Acasta Enterprises Inc. (TSX: AEF) (“ Acasta ” or the “ Company ”) today announced its consolidated financial results for the quarter ended March 31, 2018 and provided the following corporate update.

Financial and Operating Highlights

Acasta’s results from continuing operations for the three-month period ended March 31, 2018 included revenues of $67.0 million, a net loss of $38.9 million or $0.44 per share (basic and diluted), an adjusted net loss of $25.2 million or $0.28 per share (basic and diluted) and adjusted EBITDA of ($4.6) million compared to revenues of $63.8 million, a net loss of $0.3 million or $0.00 per share (basic and diluted), adjusted net income of $3.1 million or $0.04 per share (basic and diluted) and adjusted EBITDA of $12.6 million for the three-month period ended March 31, 2017.
Acasta’s results from discontinued operations for the three-month period ended March 31, 2018 included revenues of $22.5 million, a net loss of $129.9 million or $1.45 per share (basic and diluted), an adjusted net loss of $96.8 million or $1.08 per share (basic and diluted) and adjusted EBITDA of ($81.9) million compared to revenues of $29.2 million, a net income of $4.5 million or $0.05 per share (basic and diluted), adjusted net income of $6.2 million or $0.07 per share (basic and diluted) and adjusted EBITDA of $24.5 million for the three-month period ended March 31, 2017.
On March 27, 2018, Acasta closed the sale of Stellwagen Group (“ Stellwagen ”), disposing of and derecognizing substantially all of the net assets in the former Aviation reportable segment.
On May 14, 2018, Acasta monetized its interest in the Stelloan profit participating notes (“ PPNs ”) for net proceeds of approximately $28.5 million. These proceeds exclude the additional U.S. $5 million in downside protection due from the purchaser of Stellwagen pursuant to the sale agreement.
As a result of the sale of Stellwagen and the PPNs, Acasta has effectively reduced its total indebtedness by approximately $68.8 million.
Acasta entered into a definitive agreement to sell JemPak Corporation (“ JemPak ”) on May 10, 2018 to Henkel Canada Corporation, a wholly-owned subsidiary of Henkel AG & Co. KGaA (“ Henkel ”) at a purchase price of $118 million on a cash and debt free basis, subject to customary working capital adjustments and indemnities. The parties expect the transaction to close on or about May 31, 2018.
At March 31, 2018, the Company was in breach of certain financial leverage ratio covenants under its credit agreements. Failure to meet these covenants at March 31, 2018 caused the debt outstanding under the Credit Facility and US Credit Facility (the “ Lenders ”) to be presented as a current liability, which the Company would not be able to satisfy if called by its lenders. In response, the Company sought and obtained waivers from the lenders in respect of such covenants subsequent to March 31, 2018 and also modified terms of the covenant requirements under the Lenders’ credit agreements that resulted in an increase in the maximum permissible debt to EBITDA ratios for the period through the earlier of the sale of JemPak and July 31, 2018, subject to certain conditions.

The conference call will be archived on the Company’s website at www.acastaenterprises.com and will be available for replay at +1 (905) 694-9451 or toll-free (Canada/US) +1 (800) 408-3053 with passcode 8033218#, expiring on June 21, 2018.

Advisories:

Cautionary Note Concerning Forward-Looking Statements

This news release includes forward-looking statements. All such statements constitute forward-looking information within the meaning of applicable securities law and are made pursuant to the “safe harbour” provisions of applicable securities laws. Forward-looking statements include, but are not limited to, monetizing the PPNs and statements about other anticipated future events or results, including comments with respect to Company’s future financial performance and condition. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions and are identified by words such as “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions concerning matters that are not historical facts. Such statements are based on current expectations of the Company’s management and inherently involve numerous risks and uncertainties, known and unknown, including economic factors. The forward-looking information contained in this news release is presented for the purpose of assisting readers in understanding the Company’s business and strategic priorities and objectives. A number of risks, uncertainties and other factors may cause actual outcomes or financial results to differ materially from the forward-looking statements contained in this news release, including, among other factors, those referenced in the section entitled “Risk Factors” in the Company’s annual information form for the year ended December 31, 2017, a copy of which is available on the SEDAR website at www.sedar.com under the Company’s profile. Forward-looking statements contained in this news release are not guarantees of future outcomes performance and, while forward-looking statements are based on certain assumptions that the Company considers reasonable, actual events could differ materially from those expressed or implied by forward-looking statements made by the Company. Readers are cautioned to consider these and other factors carefully when making decisions with respect to the Company and to not place undue reliance on forward-looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by the applicable law, Acasta does not undertake any obligation to update publicly or revise any such forward-looking statements, whether as a result of new information, future events or otherwise. These cautionary statements expressly qualify all forward-looking statements in this new release.

Non-IFRS Financial Performance Measures (Unaudited)

Adjusted net income (loss), EBITDA and adjusted EBITDA are not recognized measures under IFRS and this data may not be comparable to data presented by other companies.

Adjusted net income (loss) is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted net income (loss) is intended to provide investors with information about the Company’s continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.

EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. EBITDA is intended to provide investors with information about the Company’s continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.

Adjusted EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS, being the calculation for adjusted net income (loss) and then further adjusting for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted EBITDA is intended to provide investors with information about the Company’s continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.